Philips 2006 Annual Report Download - page 38

Philips Annual Report 200638
Income from the sale of securities
in millions of euros
2004 2005 2006
Gain on sale of Atos Origin shares − 185 −
Gain on sale of Great Nordic shares − 48 −
Gain on sale of ASML shares 140 − −
Gain on sale of Vivendi Universal
shares 300 − −
440 233 −
During 2006, there were no sales of securities, whereas in
2005 a gain of EUR 233 million was recognized on the sale
of the remaining shares in Atos Origin and Great Nordic.
Other fi nancial income of EUR 217 million in 2006
included a cash dividend of EUR 223 million from TSMC,
a gain of EUR 97 million upon the designation of the
TSMC stock dividend as trading securities, and a gain of
EUR 29 million as a result of an increase in the fair value
of these trading securities. This was partly offset by losses
of EUR 77 million resulting from an impairment of the
available-for-sale holding in TPO Display Corp. and EUR
61
million due to a decline in the fair value of the share
option within a convertible bond received from TPV
Technology Ltd.
In 2006, the investment in TSMC was no longer accounted
for using the equity method, since Philips is no longer
able to exercise signifi cant infl uence as a result of the
reduction in both the shareholding and the number
of Philips board members.
Income taxes
Income taxes amounted to EUR 137 million, compared
to EUR 506 million in 2005. Income taxes in 2005
included EUR 240 million of withholding taxes related
to the transfer of TSMC shares to the Company from
its fully owned subsidiary Philips Electronics Industries
Taiwan, partly offset by tax gains of EUR 109 million
relating to fi nal agreements on prior-year taxes in the
US. Income taxes in 2006 were positively impacted by
a reduction of the Dutch corporate tax rate (EUR 70
million) and tax gains of EUR 40 million relating to fi nal
agreements on prior-year taxes in various jurisdictions.
The tax burden in 2006 corresponded to an effective tax
rate of 11.3% on the pre-tax income. The effective tax
rate in 2006 was affected by tax-exempt items such as
TSMC dividends, as well as the gains and losses resulting
In India, Philips launched a pilot project for rural dwellers with
limited access to electricity, involving two rechargeable lighting
products – a weatherproof, portable lamp for general illumination
and a hand-held, hand-cranked LED fl ashlight.
6 Financial highlights 8 Message from the President 14 Our leadership 20 The Philips Group
Management discussion
and analysis